Lynn Andris: The #1 Trick To Successfully Leasing Your Property

byDamon JanisonJuly 12, 2012

This is a tremendous interview with veteran investor Lynn Andris!

Learn how she passed on a property then got ‘showed-up’ by her 19 year old son. He saw the value, purchased it, and made $42,000 capital gains and gets $650/mo cash flow. Lynn explains what she missed that her son didn’t.

On a property Lynn purchased she did a $60,000 rehab for only $30,000 and explains how.

The last half of the interview Lynn explains how she methodically, effectively, and successfully rents her houses out to excellent tenants. Her leases are signed before the rehab work is complete.

You need to know her #1 trick to successfully leasing properties, it’ll blow you away how simple and effective it is.

It’s good to see you. I appreciate you taking some time out to talk to me about real estate investing.

Oh, I’m excited to do it.

Good. Good. Well, we’ve known each other for a little while. And we’ve talked about your real estate investing experience. And I think the people that watch this interview are going to learn a lot from it. And I’m excited for the things that you’re going to share.Because I know you’ve got a lot of great stuff in store.
I do have stories.

Good. Good. Stories are good. So let’s talk first about your experience with real estate investing. Give us a little bit of background if you could on what you’ve been doing, how much real estate you own, that sort of thing.

Well, I’m actually a second-generation real estate investor. My parents were real estate investors in California. It’s a little bit different model from what we typically do, especially here in Texas because the laws are not as an investor-friendly in California. So it’s along-term hold. And a lot of it is tenants, taxes, and toilets because you’re doing all of that out of pocket until you’re waiting for your payoff in the end, which can be a decade or more later.

And so that was the model that I grew up in. So I remember as a kid going through homes. And my dad, that was his entertainment. Any time he had spare time we were walking homes.And we would walk model homes and for new building construction. And we would walk homes that he was interested in investing in.

And we also had several family members that didn’t do so well with choosing their homes and we would buy theirs when they got into stress.So we were accidental landlords as well as intentional landlords. And I helped out with the management of those properties, with the terms of those properties. So I got a feel for it then.

And when I went to move from California about 11 years ago now, I was looking for some place that had much better landlord laws. And Texas– that’s part of the reason I came to Texas. Not having a state income tax helped too. But it being an incredible place to live and a place that I thought was really going to do well with employment.

So about 10 years ago I came here.And as happens with many of the people that we talk to, life happens.And so it was really only about four and half years ago that I kind of woke up one day and went, oh, my gosh. I’m way off track. I don’t have any real estate. And I need to get back into it and make sure that we have that income coming in for our retirements.

And that’s when I heard LifestylesUnlimited on the radio. And it really resonated with me. And I wasn’t able to come to the free workshop, but my husband came. And we usually make decisions together. But he came home and said, oh, forget it. This place is for you. I went ahead and bought us a membership.

[LAUGHTER]

That’s it. From that very first day. Because he knew I would love it. He knew that everything that they were saying was exactly how I viewed real estate. And so then when I attended the two-day, it was really exciting to see that there was a different way to invest in real estate that wasn’t tenants, taxes, and toilets. It was the ability to invest and enjoy passive streams of income right from the very beginning.

And so I presented myself here as a brand new investor, because I was. I didn’t understand this model.

So your model from California had been you buy, you hold onto it for a long time, you hope it appreciates in value, and then you get a payoff at the end. Your perspective now switched to where you’re looking at as ongoing, current, passage streams of income, not waiting for the big day at the end.

Right. And it’s like being able to take your retirement now rather than having to wait for that time in the future that never quite makes it to today.

Right.

So it’s that kind of difference. And not only do we capture equity so we do have that gain at the end, but we have, every month, that income coming in from those properties.
So this was about four and half years ago when you got into the real estate market in Texas? OK, I think I interrupted you. You were going to get into what you purchased.
Yeah. So we purchased– I’m trying think how many houses. Six or eight houses. And we sold some of those since because we are following theLifestyles model and we’re moving into multifamily. So we’re just now getting ready to close– hopefully next week I think it is– on a 90-unit property in Arlington.

But with the single family homes, we did homes that were close to our area to begin with. And then we discovered that we really did have the ability with the team we’d put in place to be able to manage property throughout DFW.

And then I began to draw in my family.So now it’s my husband and I, my mother, and two out of my three children. So it’s become a family business.

Are they buying their own properties or are you going into these deals together?
We are working on each project as a family, but my oldest son bought his first rental at 19. And he did get a partner because even though he had strong income and four years of filing taxes, the bottom line with the lender was, he’s too young. We’re just not giving the loan to a 19-year-old.

Right.

But he– it’s all his money. And he got a partner, which was his grandmother who was willing to put her credit on the line and sign on the loan. But he runs that property.
That’s great.

And it produced for him– he has property management in place because he is in school and he has a career and a lot of different things going on. But even after that, he clears over 650 a month on that property.

That’s $650 a month profit. That’s wonderful. What was the amount of capital gains that he’s gotten on that property?

In that property, he has $39,000 based on the appraisal done last year.

OK. So a 19-year-old, your son, he goes and buys this property. He increases his wealth by $39,000, and he’s got $650 a month of income coming in on that property. That’s awesome.
$6,400 out of pocket. Which was hard-earned at that age. It’s hard for a 19-year-old to save $6,400.

Yeah.

He had that money. And it worked out really well. But now his younger brother is actually doing flips in order to earn the money earn the money to–
To get the money to go buy property.

Yeah.

That’s wonderful. Now I don’t know if you remember a lot of the details about the property, the deal, that your son did. But can you share that with us so that our listeners can get a feel for how this can kind of work?

Sure. It’s a fun story because a lot of people, when they hear this story,they think that the reason he was successful was because of me. And that I am a mentor and I help people learn how to invest in real estate. But this is one that I passed by.

We both got the email from a wholesaler at the same time. And he called me up on the phone and he said, are you going to buy that house?And I said, no. We don’t buy houses in that area. And he had gone to work for an appraiser. And he knew that area because he had done several workups for appraisals in that zip code. And he knew exactly where it was located.

And he said, OK. Great. I said, I’m going to buy it. Will you go done–because you’re closer than I am right now, you’re halfway there. And I just want you to go put eyes on the property. And I told him, no. We don’t buy in that area. And he said, no, you don’t buy in that area. I do.

As soon as I turned onto the street, I knew that I had made a big mistake. And has– this is the best-producing property in the whole family portfolio.

[LAUGHTER]

But the wholesaler had purchased it for 52. He had a contract for 52. He,Stratton, paid $62,000 for the property.He put $22,000 in it. And it appraised for 126.

Wow. So the $22,000 he put in it was for repairs and getting it ready to rent. Is that correct?
Right. Yeah. It was locked in the ’70s. It had been very well taken care of. But there hadn’t been a stitch of upgrade since the day that house was purchased back in the ’70s.

And so he had to bring all that up to date. He also chose, because he did have plenty of room in his budget, to open up the galley kitchen and turn it into a bar area that opened onto the living space. And that made a huge impact, just from the people walking in weren’t used to seeing homes that open in that area.

So that small choice, which cost him less than $1,000 to do, made a big difference, I think, in the impact of the home both to the appraiser and to people interested in renting it. And he believed it will. And I agree with him when he goes to sell it.
Yeah.
So it was just an update of that rehab.Putting in new appliances, new flooring, paint. Did some service on the HVAC, a roof repair. The roof’s now been replaced because the last hailstorm that came through our area took out the roof.

And he had put full replacement value insurance on it. So the roof was replaced. And so it’s a beautiful property on a beautiful street.

Well, that’s great. What a great story.That’s excellent.

Yeah.

So let’s talk about another deal that you were involved in. Because I want to ask you some questions about getting money for doing the deal, how are you working with contractors, and getting the property ready. And then also getting into how do you pick tenants and what have been your experiences with tenants, which is a big concern that new investors have and how to deal with that.

So what’s one of the properties that stands out in your mind about how you found it. And let’s start with that. How did you find it?

Well, one of the first rental properties that we did it after coming to Lifestyles Unlimited was actually brought to me by one of our realtors here. And it happened kind of in an odd way because it had already been presented to our members to buy and nobody wanted to buy it. And he had actually asked any of the mentors here if they wanted to buy the property. And they didn’t.
So I happened to run across him later in the evening here in the office. And he was hopping mad. He couldn’t believe that no one could see the potential of this property. Because it was an ugly duckling. And he is very experienced in real estate. And so he thought that this property had the potential to become a great moneymaker. And at that point I decided we needed to– we really believed in the model. He was my mentor and I trusted him. And so I told him I’d buy it without seeing it.

[LAUGHTER]

Then, of course, we don’t buy properties without seeing it. So he sent me out to look at it. And I drove up to the property and it had a “Not Fit for Human Habitation” sign on the front door.

Wow.

And the front door was L-bracketed in.All the windows were gone. The inside of the house had been graffiti-ed and pretty the rodents and run the gangs out. There’s no back door. And I’m sitting there going, OK. What have I done? But he sees the potential. SoI’m going to go ahead and go through this.

Usually we don’t have projects that look that bad from the outside. But what people couldn’t see is that the bones on this property were very strong. Up here in North Texas we have a lot of foundation issues. This property’s been sitting there since the ’60s. It had been empty for four years because the owners had gone into long-term care. And then the property had gone into probate when they died. And there had been a lot of conflict, I guess. And so it had been sitting there empty for quite a long time.

And yet the foundation needed no work. It had never had work and it didn’t need work now. So that caught my attention. Here in our area when you have a property that’s been around that long with no foundation issues, you’re excited.

[LAUGHTER]

Because that means it’s nice and stable. But we did go into the project. And of course we we’re able to get it at very low price. And it was in the 60s. Somewhere in the 60s we purchased the property for.

It was a $30,000 rehab. We put on a brand new roof. We squared off this odd addition they’d done in the back. We squared it off and then used the rounded part to make a nice rounded patio outside with double doors. So we made this showcase room for entertaining at the back of the house.

And we did all new flooring. Maybe I should say what we didn’t do. The only thing we didn’t do was the upper kitchen cabinets. When they took the countertops off, the bottom kitchen cabinets fell down.

Wow.

So we had to replace those. We took it down to the studs because we took a lot of the paneling just really dates the house. So we took all the paneling down and put drywall in. And really built the house back up. We did beautiful flooring. We did nice tile in the bathrooms and the showers and opened them up and put nice doors on the showers. And put it new sinks and the whole bit.

And by the time we were done with the property, we had about $90,000 into the property and it appraised at 135.

So that’s about a $45,000 capital gain on there.

Right.

Now how did you– I would imagine some people who are going to take on a rehab project like that might have spent $60,000 on the repairs. There’s a big variance, right?

Right.

So how did you get all of that done for just $30,000?

There is no way we could have taken on a project like this or made those numbers work without having a team. And being a member of LifestylesUnlimited, we have a team of over 70 vendors. And throughout the process, from the lender to insurance to surveys to the contractors and then having somebody to check credit and criminal on potential tenants, all of those vendors that come together were part of my team from LifestylesUnlimited.

And I had attended meetings with them. I’d listened to them teach. I had been out on properties on road trips with them. And so out of the selection that I had, I had selected the people that I clicked with and resonated with as we kind of thought the same.

And then we spent a lot of time walking through that property. And that was one of the first that we did, so I learned a lot from them on what the potential was and what you could do. The value for the money was unbelievable. And that’s the first thing that really surprises people.
Unfortunately, we had just rehabbed our own home before we became members. So we really knew what a big difference was between the pricing when you just go out there, even to Angie’s List or to your phonebook or recommendation from friends, the prices you pay, it’s almost double what we pay as investors.

So the lesson to learn from your experience is to really do your research and build a team of people you click with that understand investing, that understand investors, and you’re going to save a whole lot of money on the costs. Yeah. And that’s really important because if– my experience with investing, as I’m sure it is with yours, if you pay too much to get the property rehabbed, that’s cutting into your capital gain. And it could take a deal that was a really good deal and make it an average deal or maybe not even a very good deal at all. So you’ve got to be real careful with that.

Yeah. You’ve got to watch those budgets up front. And it’s really important to make all– before we even closed on the property, we had our budget set and we knew exactly what we were going to do to the property. We had a detailed bid. And we didn’t deviate from that.
So sometimes you panic when you start writing the checks. Panic sets in. And it’s really important to stay firm on that because you made all those decisions based on a target after-repair value that you’re trying to get from your appraiser. And so it’s really important to get all those decisions made up front, find those contracts get started right away as soon as you close. And then make sure that you stick with your program and stay brave through the rehab process so that you execute your plan and actually get the value you expect to get.

We were conservative. So we expected to get about $120,000 ARV on that. But we ended up with 135 because it was so beautiful. But that also is partly reflected in how conservative we are.
Right. Which is another great point. Be really conservative when you’re doing your planning. And if the deal is really good when you’re being conservative,then it just reduces your risk and makes everything go smoother. Excellent advice.

So you get the rehab done. Now you’re ready to rent the house. You’re not going to sell it. This one you actually rented out. Am I correct?

Yeah, you’re right.

OK. So you’re ready to rent it out.What do you do next when the house is all ready to go?

Yeah. That’s an important point too. Because people like flipping. It’s sexy when it works. And unfortunately when it doesn’t work it’s terrifying. But when it works, it’s just a real sexy thing and people like to talk about flipping.

But flipping doesn’t create passive income. That’s what you do if you need to capitalize and you don’t have the money to go into investing, then that is something that you can do to get started. But it’s really important to make that shift and actually acquire rental property. Because it is the rental property that creates the passive that allows you to live the life you want to live and not be working in a job.

And otherwise you’re just– flipping becomes your new job. And it is the worst job.
It’s a lot of work.

Stressful. And it’s a lot of work. I don’t think people realize that. So, yeah.This is definitely a rental. And we were so excited to have this property. And before the rehab was even started, we already had our plan in place for how we were going to put the tenant in the property.

So here in our area we have some local papers that we can list with. And we have different online resources.And we use those. We started with a sign in the yard. That’s the simple thing. Just a simple sign that says”For Rent” and a phone number. And that was it.
And then we also put it out there on Craigslist. And since then I’ve discovered other things that we do — postlets.com is a great little site that you can go to that will then propagate your ad to other sites. And it has a great format that it puts the information in. So I really like that.

But we just went out there, just the real simple process. The sign in the yard and that listing on Craigslist. And from that, my phone absolutely exploded. So now we’re maybe one week into the rehab. And I’m getting literally 30, 40 calls a day.
So you’re getting calls before you even finish the rehab. The house isn’t even ready for someone to live in it and people are calling you interested.

Yep.

Great.

Now, on that property what happened is– I learned some things on that property. Because that was too much volume to deal with. So I actually took the listing down for about three or four days. And then I put it back up at $100 more. And that then generated four or five calls a day.
Which is more manageable.

Right. Became a manageable number of people. And clearly my price was too low with the interest that I had before. And then I answered my phone. That sounds so simple. But it’s the number one trick to rent your property, is answer your phone when it rings. There it is. That’s the magic. All I have to offer.

That’s great. So tell me why that makes a difference.

You will differentiate yourself from every other landlord. I was really surprised and continue to be surprised because years later, I’m still doing this. I will call all the houses that I’ve seen with for rent signs. And no one answers. There’s not any substantial information on their message. And many other them, 3/4 of them, don’t call you back. And you’re not going to rent your property that way.

So I answered the phone. And I realized that it was sales. Because the temptation is to interview them. Who are you? And tell me what’s about you. I know there’s something bad about you. Are you a criminal? Are you gonna tear up my house?
But when you do that, you’re turning them off. So I realized this is a sales effort. So I’d ask them a question and then I would relate to the property and how much they were going to love living there. When they mentioned that they had children, I’d mention the school down the street. And I looked into its reputation. It was an exemplary school. And I shared that information with them.

And so as they shared information, I shared information back and forth. And then by the time they came out to the property, we had a bit of rapport as well. And I did schedule everyone to come at of the property at one time in a two-hour window. So I had about six or seven families going through, which created a sense of urgency.
Did you tell them to come within that two-hour period of time or did you set a specific time for each one of them?

I told them to come within that two-hour period of time.

OK.

So it gave them a bit of a window.

And then they would see other people looking at the property too, whichp robably increased the demand to–OK. Very good.

Yeah. That created that sense of urgency.

Yeah.

And then I had worked to make sure we had looked at the pictures of all the properties that had recently sold in the area. And also the properties that were for rent that we’re going to be our competition. And in the rehab we made sure that we were going to have the best property. So when people walked in it was, oh, my gosh. We wanted it to be the best house they’d see.
And our price was just right there. Where, the combination of it being the best property they looked at and the price just being right there at the lower end of what they were looking at, there was no one who didn’t want that property.

And so I had asked them to bring the information they needed to fill out the application. I don’t let them take it away with them. Because you lose them that way.
You just have them fill it out right then and there?
Yep. And they had the cash with them to pay for the credit and criminal check.
Did you tell them beforehand to bring the cash for the check?

Yeah.

It’s what, like–

I have a system of communicating with them. So I take that first call and get their commitment to come out to the property and take a look. And thenI get their email address so I can follow up with them. And it also increases the chance that they’re actually going to come out. So if you have six people say they’re going to come to the property, you can go out there and have none show up or maybe one. But if you do– I’ve learned over the years that if I do this little follow up program– it’s like a marketing campaign. It’s a little marketing campaign. It was great to talk to you. Here’s a little bit more information about the house and some pictures from the interior that you didn’t see. Remember that you’re going to need a copy of your driver’s license and your social security card. Remember to bring information about where you used to live and your landlord’s contact information and your current employers.

In two emails and then a phone call the day of saying, hi, this is Lynn again. Because by now they know who I am. And then, so excited to see you tonight between six and eight PM. Remember to bring these things. And so I had five of the six show up.

So this system is really interesting, Lynn, because it’s like you kind of methodically go through and do this thing so that when they show up to look at the property, they’re ready. If they’re qualified and everything, you’re collecting the fee for to do their background check and everything. They’re filling out the application. I know so many landlords or investors that will just kind of go ad hoc and drag this thing out for a long time. And they lose people on the way.

You’ve got a real efficient system, it sounds like, to get the job done and get a tenant into that property quickly.

Yeah. And that was key for me because I wanted to have a good pool of people to choose from. But I also wanted– this was the butterflies of my stomach of the I’m not going to get a tenant. So I wanted to make sure if I got someone on the hook, I kept them on the hook.

Yeah.

And I didn’t lose them. Because you’re right. You drag it out, they’re going to go somewhere else. Renters are really interesting. They just kind of fade away even though they still need a house to live in, they just kind of disappear. So I’ve got them on the hook.
So out of the five I had four apply. And I took the applications and I explained to them that it’s the first person that got all the way through the process. So it wasn’t the first–because that was the thing. If I was number one, then this house was mine. It’s like, no. You have to get all the way through the process.

So I have to be able to reach your previous landlord. I have to be able to reach your employer. I have to be able to give them this authorization and get the information back from them. And then when I do your credit and criminal, if there’s anything I need to follow up on, I need to get that information back quickly.

And so addressing that with them right there and them knowing that there was competitors, I think gave them a real motivation to answer any questions that I had right way.

Yeah.

And some people don’t fill out their applications. I did learn from that one how important it is to check the applications when you’re there with them and make sure you can read their writing.

Ah, yes.

So that you didn’t have to make the follow up calls because there were things that weren’t answered or things that I couldn’t read. So I’ve changed my process a little bit. With each property you learn something.

And then I made sure I did the nationwide credit and criminal check. I don’t ever skip that process. That is a critical component. And what I discovered in this process is that I emphasize to all of them that I’m going to do this. But they didn’t believe me. Because that’s because there’s enough landlords out there that just pocket the money and don’t do the check, that they were counting on me being one of those.

Uh huh. Right.

And so I had a tenant selection criteria that said that I didn’t take felons, I didn’t take certain behaviors. And yet there they were coming up on the credit and criminal. And they were actually angry. But it was because they didn’t really believe that I was going to do it. So out of those four, two qualified. And it was the first one through process that actually got the house.

That’s wonderful.

And they moved in– the biggest stress in this business for me is right here. And people think that the biggest stress is going to be my property is going to go and I’m not gonna have a tenant in it and I’m gonna go months without rent.
My stress is the exact opposite. Is my rehab ran a little bit late, and my tenant wanted to move in.

And it wasn’t ready?

And so here you are telling your general contractor you running crews night and day. Because the tenant’s moving in on this day. They finished the house at about 10 o’clock at night, had the appraiser in at nine AM the next morning, and then had the tenant and noon to give them the keys and walk the property with them.

Wow. That’s awesome. I love it.

And that happened on every property.That’s how tight the timelines is.

Have you documented your process that you use to do this whole thing?

It’s actually something that I teach. It’s called Time is Money: How Tight is your Timeline? And I actually have that timeline checklist and I thought I was the only investor that was a little chaotic and didn’t have it together. And I woke up one morning after buying a house through a private sale and realized I didn’t have insurance on it. And after calling and getting insurance on the property– fortunately it didn’t burn down that night– I sat down and just thought through every step from getting your credit in order all the way through getting your mailbox money.

And I outlined those steps. And then I sent it out to the other mentors and realtors at Lifestyles, and other investors that I know. And every time I present, I invite people to add things that they think are important to it. So it’s a really concise list now.

And I have a class that goes with it. And I love teaching because veteran investors always come away with three or four things that they’re not doing that they can start doing tomorrow to tighten up what they do and make more money. And new investors, of course, get the map.

Yeah.

They get the road map.

Yeah. That’s really exciting. Because I know that you’re going to be starting up another program, a mentoring program, here pretty soon.

Mmhmm.

And right now a lot of the teaching you’re doing is with investors right there in your area. This new program you’re doing is going to be nationwide. And you’ll be able to help teach this to other people. So I think that’s exciting because you’ll be able to take this map and share it with so many people out there. Very, very valuable.

I am so excited about this because we have– here in our DFW office– we have about 12 out-of-state investors that I work with. And it really made me want to broaden this up and reach more people. Because these things apply, no matter where you’re investing. These steps are critical to be successful.Robe de soirée moins de 100

And for some reason, people think real estate investing is this lone wolf thing.You’re out there. You’re all on your own. You’re the independent real estate investor. But the really successful people will tell you that they have a huge team behind them and that they possibly the least talented person on their team.

And that certainly is the case with me. I have an incredible team that’s made me successful. And I have my family now that, we’re doing this together. And it really has been an amazing, life-changing thing. But it is the strength of the team and the process. And the benefit of following someone that’s done it successfully. Following the model that works. Because you can spend a whole lifetime figuring out what not to do. But all you need is the critical path of what to do.

And so I really like the idea of being able to share that with people all over,no matter where they’re living. And allowing them to use these skills sets and to ask questions and to get information so that they have that team in place so they can be successful as well.
Yeah. That’s great advice, Lynn. It’s really good advice. I’m excited to see what you do with this. Because I know I’ve watched you helping other people, helping other investors get started on this path. And I can just sense your passion in it. And you love to help these people.

[LAUGHTER]

You know, it’s funny because I started this business because we wanted the passive income. Real estate is the best vehicle for creating passive income. And it’s tax-free. It’s really the only vehicle out there. People will loan you money to do this. And then the government will give you all sorts of deductions on your taxes to do this. And you can create a wonderful income. And it’s something that, with the right team in place, you don’t have to be any particular place at any particular time doing any particular thing in order to have that money come in. So that’s the lifestyle that I wanted.

But when I had the opportunity to become more involved in Lifestyles and then to go from a member of Lifestyles to a mentor at Lifestyles, what I didn’t realize is the incredible experience it is to help somebody else change their financial future and the financial future of their family. And there’s nothing like that experience when somebody sends you an email or pops into your office or calls you on the phone and says, I just want you to know you changed my life.

And that’s why I do what I do and take my time that I can now choose to spend the way I want to spend. Why spend it with other investors? Because I haven’t found anything as satisfying as that. And plus once you’re retired, you want other people to be retired so they can come out and play.

Yeah. You need someone to play with.

[INTERPOSING VOICES]

[LAUGHTER]

That’s right. That’s awesome. Lynn, I appreciate so much your time today.You’ve given me and our listeners some real valuable information. And I want to thank you for that. It’s been great talking to you. And I’m looking forward to seeing what you do with this new program that you’re putting together.